Government calls for construction procurement rethink

1 June 2011

1 June 2011 | Adam Leach

Public sector buyers must pay greater attention to the whole-life costs of construction projects to make savings of 20 per cent by the end of the current parliament.

The UK government’s Construction Strategy, published by the Cabinet Office yesterday, has called for sweeping reforms in the way the public sector buys construction services to increase value for money.

The report calls for a move away from concentrating on a price upfront in favour of more innovative strategies, reducing the number of players in the supply chain and increasing the focus on overall value of service.

A Government Construction Board will be formed to oversee all public sector construction projects and the implementation of the reforms. It will be chaired by the government’s chief construction adviser, Paul Morrell. “The board will help strengthen the public sector’s client power in the scoping, design, procurement and delivery of all construction projects,” he said in a statement.

Another key aspect of the strategy is to establish effective benchmarks for public sector projects which take both upfront cost and total value into account. Cost will remain a priority, but not if it harms whole-life value. Buyers must also develop a clearer picture of how construction projects will meet the goals of the services they will provide.

The report also highlighted the need to look more closely at the optimum number of suppliers. While it said the benefits of competitive tendering remain, it called for an increased collaboration throughout the supply chain. This will mean “working with fewer suppliers in a more settled supply chain”.

Early indications suggest that the new strategy has been warmly received by the private sector. Neil Bentley, CBI deputy director-general said: “The strategy is a positive step forward, recognising the important role that construction plays in the UK in terms of jobs and economic growth.”

He added: “The government must now continue to work with the construction sector to swiftly implement the strategy. Doing so will boost the confidence of the whole construction supply chain, stimulate innovation and ultimately lead to better value for the taxpayer.”

The revised strategy comes at a crucial time for the construction sector. Yesterday it was reported that insolvencies in the sector had jumped 19 per cent in the first quarter of this year compared with the same period in 2010.

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